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From left, Larry Warnock, CEO of Gazzang Inc., and Robert Reeves, Daniel Nelson and Pete Pickerill of Datical Inc. were part of the initial management team at Phurnace Software Inc., which was acquired by BMC Software Inc.

But today, all three are working in the next generation of Austin’s startups, and they’ve brought with them the experience and earnings they gathered at Phurnace Software.

They’re just a few of the city’s serial entrepreneurs who are driving growth in Austin’s startup industry.

From 2010 to 2012, Austin added 918 small businesses, despite the nation losing more than 170,000 small businesses, according to the U.S. Census Bureau. An analysis by On Numbers, the research division of the Business Journals, rated Austin the top city for small businesses in 2010 and 2011.

Ned Hill, a venture capitalist at DFJ Mercury, is in the business of sorting through those new companies and picking winners.

He estimates that one-half to two-thirds of the companies he’s invested in were founded by entrepreneurs who had already started at least one business.

“You’re looking for people who have the ability to develop disruptive products and bring them to the market,” he said, adding, “There’s no better predictor of success than past success.”

Warnock, the former CEO of Phurnace Software who is now CEO of Gazzang Inc., sees a similar trend: “Entrepreneurs who are good at [building companies], they do it again and again.”

Often, he said, it’s not just the founders of the companies who go on to begin again; it’s the employees too.

“Success like a WhaleShark Media, Convio, HomeAway … fuels the next generation of companies. Success begets success,” he said.

Warnock pointed to the success of Tivoli Systems Inc., an Austin software company that was acquired by IBM Corp. in 1996. Since its acquisition, former Tivoli employees have fanned out and started more than 40 companies. Former Tivoli CEO Robert Fabbio is moving on taking his fourth company, WhiteGlove Health Inc., toward an initial public offering.

“Many of the startups in the next generation had Tivoli people populated throughout,” Warnock said. “This ecosystem is constantly growing and supporting itself.”

And serial entrepreneurs aren’t just working in Austin’s technology sector.

Clayton Christopher started Sweet Leaf Tea Co. in 1998. Back then, he had $12,000 and his grandmother’s iced tea recipe. He made the tea using pillowcases full of leaves and garden hoses in his kitchen.

By the time Sweet Leaf was acquired by Nestlé Waters North America, the company was on track to do $70 million in revenue, Christopher said.

The deal itself was bittersweet, he recalled, as he watched the team he had built dissolve and go separate ways.

And there wasn’t much question that Christopher would end up in another corner office. He founded Deep Eddy Vodka soon after and has built it into the third-largest distiller in Texas. Christopher calls startups a passion.

“I love more than anything creating, taking ideas and bringing them to fruition,” he said.

Reeves, Phurnace founder who is now working at his startup Datical Inc. along with Nelson and former Phurnace employee Pete Pickerill, said the risk was what attracted him to the idea of a new company.

“You really want to gamble,” he said, “Try working for a year and a half without any pay.”

Whatever the reason, Austin’s entrepreneurs agree that it’s hard for them to stay out of the business.

“There isn’t a better place in the world to found a new company,” Reeves said.

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Robert Grattan covers government, courts and economic development for the Austin Business Journal.

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